globalEDGE Blog: African Governments Take On Chinese Oil Companies

African Governments Take On Chinese Oil Companies

Chinese oil companies that have held exclusive oil-extraction privileges for nearly a decade in Western Africa are now facing resistance from governments who claim that the Chinese are "gouging, polluting, or hogging valuable tracts." In Niger, private auditors have recently uncovered large costs and impractical charges made by the China National Petroleum Corporation, which has added another argument for the revisions of trade agreements that have already saved Niger tens of millions of dollars from the Chinese. In neighboring Chad, the government recently shut down Chinese oil operations after discovering immense amounts of environmental pollution within their borders. Gabon has also joined in the fight against the Chinese petroleum corporation, which surprised the oil industry by withdrawing a permit from another Chinese state-owned company, Sinopec, and giving it instead to a newly created national oil company.

According to the African governments of resource-filled countries, receiving a fair balance of trade for their oil with the Chinese is vital for their nation's development and fight against poverty. When Niger and China first brokered a deal in 2008 that gave Chinese companies oil exploration rights, there was widespread concern that only a small circle would benefit from the deal, leaving most of the population without any benefits from the oil industry's gains. Five years later, Niger is currently positioned at the very bottom of the United Nations' human development index, which has provided evidence that the Chinese have provided few jobs, low pay rates, and harsh working conditions rather than economic prosperity. In Chad and Gabon, their complaints towards the Chinese have been centered on the environmental degradation that the Chinese companies have left, such as the Chinese dumping excess crude oil in ditches in Chad's capital, N'Djamena, and forcing Chadian workers to clean the mess without any protection.

The Chinese have strongly rejected these claims, however, stating that the roles of Chinese petroleum companies in Africa have only been "fruitful" for the local economies. In Niger, the Chinese claim that that have improved the economy through hiring local residents, building new schools, digging wells, and carrying out other "public welfare activities." In Chad, the Chinese government reacted quickly to the news of the crude oil dumping, stating that they would urge companies to protect the environment and seek to resolve the recent disputes through friendly negotiations. The Chinese government also stated that they support cooperation in Gabon "on the basis of equality, amity, and mutual benefit."

Clearly, these recent disputes between the Chinese and various African governments shows that although African governments are grateful for Chinese-built roads and ministry buildings, the era of unfair trade agreements that leave little benefits for the majority of these states' populations and endanger the environment is quickly coming to an end. Regional competition with Western Africa's main subsidized oil producer, Nigeria, is also a driving force for oil-endowed countries to begin developing and enjoying the profits of their own natural resources. Although the Chinese presence and economic ambitions for Africa's oil and other natural resources will not be fading any time soon, it is safe to say that the Chinese exploration for the world's natural resources will surely be facing more opposition as underdeveloped countries seek to exert more control over the economic blessings of their countries.